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With the new CBSL regulations many Finance companies have listed their shares by way of an introduction. There have been introductions in the past as well. Most of these introductions have seen the price shooting up since the start of trading and then coming down a steep fall.
The reference price as far as I know is given only on the start of the day's trading, giving the traders a few minutes to place the order accordingly. There are many others who do not even care to see these announcements and bid for exorbitant prices and the sellers oblige.
The equilibrium of supply and demand takes a while to reach and by this time the existing shareholders have made a fortune and the new entrants have burnt their fingers.
The introductory documents are available on the website but these are not prominent as an IPO Prospectus nor do broker firms release a research paper. For me, those who want to enter at many times the published reference price, which itself is a mystery on how it was arrived at, are just trying to gamble. Some succeed and others lose.
Therefore, I suggest that a fair solution is to impose a price band of some sort. Maybe a top limit of about 25 or 50% so that the price cannot go beyond that. This is maybe for only the first day or first few days. This may stop the existing S/Hs from selling fr a lower price but something must be done to stop this.
This might be a silly opinion but it's open for discussion.
The reference price as far as I know is given only on the start of the day's trading, giving the traders a few minutes to place the order accordingly. There are many others who do not even care to see these announcements and bid for exorbitant prices and the sellers oblige.
The equilibrium of supply and demand takes a while to reach and by this time the existing shareholders have made a fortune and the new entrants have burnt their fingers.
The introductory documents are available on the website but these are not prominent as an IPO Prospectus nor do broker firms release a research paper. For me, those who want to enter at many times the published reference price, which itself is a mystery on how it was arrived at, are just trying to gamble. Some succeed and others lose.
Therefore, I suggest that a fair solution is to impose a price band of some sort. Maybe a top limit of about 25 or 50% so that the price cannot go beyond that. This is maybe for only the first day or first few days. This may stop the existing S/Hs from selling fr a lower price but something must be done to stop this.
This might be a silly opinion but it's open for discussion.
